Minnesota doesn’t need higher gas taxes

The politicians in St. Paul have more revenue than ever. Why are they planning to take more money from their citizens?

Over the next two years, Minnesota’s state government is forecast to take $1.5 billion more from the state’s taxpayers than it needs to cover its projected spending. What to do with those proceeds is likely to dominate the upcoming session of the Minnesota Legislature: Should the money fund extra spending? Should it be given back to the taxpayers it is to be taken from? Should we hold our horses and wait to see how closely the forecast matches the reality?

Incredibly, even with this extra cash slopping around in state government coffers, incoming Governor Tim Walz still seems set on trying to take more money from Minnesota’s taxpayers by hiking the gas tax.

Data from the Minnesota Department of Revenue shows Minnesota’s fuel excise tax revenues in 2017 were higher in real terms than in 38 of the last 44 years. Indeed, eight of the top ten years for revenue since 1974 have been in the last decade.

That same data also shows state tax revenues, more broadly, have risen by 31 percent in real terms since 2010.

This is complicated a little by federal taxes and spending. Using Census Bureau data, the graph shows our state government’s total revenue in 2017 was higher in real terms than any year previously. Our state government’s total expenditure in 2017 was higher than all but one previous year’s expenditure.

In terms of revenue, the politicians in St. Paul have never had it so good. Why, then, are they pleading poverty and planning to take more of their citizens’ money from them? If they are having trouble funding a core amenity, such as roads, that would seem not to be the result of a revenue shortage but of a mistaken allocation of the revenue they have. With all the cash they get from taxpayers and the surplus they are projected to get, there is no excuse for soaking the state’s citizens afresh to pay for something so basic.

Minnesota Total Revenue and Total Expenditure, Billions $, 2017